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Employers and the Affordable Care Act

Employers and the Affordable Care Act. Presented for: HRMAWNE January 27. 2014 By: Russ Sullivan Vice President, Health Care Solutions Associated Industries of Massachusetts. Overview. A look back What should you be doing now?. What we know and don’t know?.

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Employers and the Affordable Care Act

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  1. Employers and the Affordable Care Act Presented for: HRMAWNE January 27. 2014 By: Russ Sullivan Vice President, Health Care Solutions Associated Industries of Massachusetts

  2. Overview • A look back • What should you be doing now?

  3. What we know and don’t know? “There are known knowns; there are things we know we know. There are known unknowns; that is to say, there are things that we know we don’t know. But, there are unknown unknowns – there are things we do not know we don’t know.” United States Secretary of Defense, Donald Rumsfeld

  4. The Known Knowns • Delayed until 2015 • Employer Shared Responsibility Assessment • Employer reporting requirements • On line SHOP exchange enrollment • Not Delayed • Open enrollment on public marketplace websites for individual plans effective Jan 1, 2014 • Individual premium tax credits and cost sharing subsidies effective Jan 1, 2014 • New Employee notice effective October 1, 2013

  5. The Known Knowns • Not Delayed • Offer insurance within 1st 90 days effective Jan 1, 2014 • Elimination of pre-existing conditions and lifetime maximums • Under 50 market plan deductible max of $2k / $4k • Under 50 market factors limited to age, tobacco use, geography and family size • Reinsurance fees - $5.25 / mo / covered life • PCORI Tax on plans effective now • Health Insurance Tax (HIT) on fully insured plans

  6. The Known Unknowns • Uncertain if the following are delayed • Provide insurance to employees who work 30 hours or more • Track employee hours for eligibility • Set measurement, stability and administrative periods • What to do? • Seek advice of counsel • Watch for future guidance • Have a “go – to” source

  7. The Unknown Unknowns • Examples so far • The delay • Spouses are not dependents • Affordability • Possible future don’t know we don’t knows • Court challenges • Pending legislation – 40 hours = full time bill • Washington stalemate • On-going website issues

  8. The New Health Care World

  9. Three Decision Drivers • Minimum Health Care Cost • Employee Options • Your health care strategy • Administration Preparation

  10. Minimum Health Care Cost • Employer Shared Responsibility Assessment for not providing health care insurance • Employers with 50 or more FT + FTE • (FT – 30) x $2,000 • Employer Shared Responsibility Assessment when providing health care insurance • Employers with 50 or more FT + FTE • $3,000 per employee who receives Premium Tax Credit

  11. Employee Options • Public Options • Medicare – 138% of FPL • CHIP – 310% of FPL • Subsidized Options • Premium Tax Credits • Employer Sponsored Insurance • Own employer • Family members’ employer • Self Insure

  12. Medicare Eligibility

  13. Medicare Eligibility

  14. Subsidized Options

  15. Premium Tax Credits

  16. Employer Impact

  17. Discussion and Questions?

  18. Your 2014 Checklist • Know your maximum ACA liability • Pay or play? • Identify possible assessment for employees who potentially do not have affordable insurance • Determine if you will use a safe harbor • Determine the economic and demographic impact • Do you want to open the door for employee access to the Connector and possible premium tax credits? • Establish your measurement periods • Watch for seasonal peaks in staffing • Determine your wellness incentive strategy • Update your plan documents • Work with your payroll providers, brokers and carriers to implement a reporting system

  19. Examples – Maximum Liability • Example 1 • 100 full-time employees, no part-time employees • 100 – 30 = 70 • 70 x $2,000 = $140,000 maximum ESR assessment • Example 2 • 70 FT employees, 30 FTEs • What is the maximum ESR assessment? • Example 3 • 30 FT employees, 70 FTEs • What is the maximum ESR assessment?

  20. Examples – ESR Assessments • Example 1 • Employee contribution to lowest cost self only plan of minimum value = $1,500 / year • 100 full time employees, 25 have pay rates < $15,789 / year • 25 x $3,000 = $75,000 potential ESR assessment • Example 2 • Employee contribution to lowest cost self only plan of minimum value = $2,000 / year • 100 full time employees, 40 have pay rates < $21,053 / year • What is the maximum ESR assessment? • Example 3 • Employee contribution to lowest cost self only plan of minimum value = $2,000 / year • 100 full time employees, 50 have pay rates < $26,316 / year • What is the maximum ESR assessment?

  21. Examples – Safe Harbors • If employee cost to purchase the lowest cost self-only insurance is less than or equal to 9.5% • Rate of Pay - Employee’s salary or hourly rate times scheduled straight time • Prior year W-2 • Federal poverty level • Setting a flexible employee contribution • “The employee cost for our lowest cost self-only plan of minimum value shall be $x or 9.5% of the employee’s rate of pay, whichever is less.” • Impact on employees who qualify for premium tax credits • Employees still receive the premium tax credit • Employer does not have to pay an assessment

  22. Examples – Economic and Demographic Impact • Prior Examples • Example 1 - 100 full time employees, 25 do not have affordable ESI • Example 2 - 100 full time employees, 40 do not have affordable ESI • Example 3 - 100 full time employees, 50 do not have affordable ESI • Key questions • How many affected employees were looking for individual v. family coverage? • What is the impact on the average age of the remaining employees? • What is the impact on the participation rate?

  23. Examples – Measurement Periods • Example 1 • Plan effective date – 4/1/15 • 12 month measurement period • 12 month stability period • When in 2014 do they start measuring hours? • Example 2 • Plan effective date – 1/1/15 • 12 month measurement period • 12 month stability period • When in 2014 do they start measuring hours? • Points to keep in mind • You are always in both a measuring period and a stability period • Keep it simple – make your stability period your plan year unless you have months with employment spikes

  24. More on Measurement Periods • Three types of new hires • Full time – eligible for benefits within 90 days of start (includes PT hired to work at least 30 hours per week) • Part time hired to work fewer than 30 hours per week – no offer of benefits required • Newly hired variable hour employee – initial measurement period of 3 – 12 months • Impact on leaves of absence • Must credit average hours for FMLA-eligible leaves • Employees returning from long term disability or a non-FMLA-eligible leave might not have enough hours to qualify for benefits for the next open enrollment period • Consider crediting hours while on any company approved leave – but BE CONSISTENT!

  25. More on Measurement Periods • Update your plan documents • “At XYZ Corp, we measure employee hours from the first of February through the last day of the following January. Employees who average 30 hours of service during this time period are eligible to participate in our open enrollment in March for the plan year that runs from April 1 through the 31st of the following March.” • State which hours are credited towards hours of service – ACA-mandated and any additional discretionary hours

  26. Determine Your Wellness Strategy • Three types of wellness plans • Participatory – rewards offered to all who participate • Activity-based Health Contingent – rewards contingent upon performing or completing an activity • Outcome-based Health Contingent – rewards contingent on attaining or maintaining a specified health standard • Health Contingent wellness plan incentives • Up to 30% of individual premium for non-tobacco related • Up to 50% of individual premium for tobacco related • Up to 50% of individual premium for both • MA Wellness Tax Credit • Available to employers with 200 or fewer MA employees • 25% of wellness plan costs up to maximum $10k credit

  27. Determine Your Wellness Strategy • Example 1 • Individual premium = $5,000 / year • What tobacco related incentives could employer offer? • What non-tobacco related incentives could employer offer? • Example 2 • Same premium, employer provides CDHP with $3,000 individual and $6,000 family deductible • Can employer contribute $2,000 to HRA of only employees who complete non-tobacco related health contingent activities? • Can employer contribute $2,000 to HRA of only employees who complete non-tobacco related health contingent activities?

  28. Determine Your Wellness Strategy • Example 3 • Same premium, employer provides CDHP with $3,000 individual and $6,000 family deductible • Can employer set employee contribution to self-only premium at contribute $1,000 to HRA of only employees who complete non-tobacco related health contingent activities and $2,500 to those who do not? • Is affordability determined by the $1,000 or $2,500 cost? • Can employer set employee contribution to self-only premium at contribute $1,000 to HRA of only employees who complete tobacco related health contingent activities and $2,500 to those who do not? • Is affordability determined by the $1,000 or $2,500 cost?

  29. Food for Thought • Plan document audit/checkup • Are all required documents in place? • Do they reflect what you are actually doing? (Or -- are you actually doing what they say you will do?) • Beware of “plug & play” documents provided by many payroll services, benefits consultants, etc. • In the new world of health care reform they are likely to become even more important.

  30. Update Your Documents • Eligibility within 90 days • Hours that qualify as full-time • FSA changes • Wellness incentives • Measurement period, stability period, administrative period • Hours that qualify as hours of service towards qualifying for benefits • Newly hired variable hour employee initial measurement periods

  31. Work with your Payroll Provider, Broker and Carrier • Tracking hours of service • Setting the employee cost for the lowest cost self-only plan of minimum value • Wellness plan • Wellness incentives • MA Wellness Tax Credit

  32. Looking Ahead to 2014 • Update on MA and federal exchanges • Reporting rules and form 1095B • Nondiscrimination rules for fully insured plans • Automatic enrollment – employers of ≥ 200 employees • Delays, stalemates, changes?

  33. Health Care Fridays - 2014 • Dates: • February 7 • April 11 • June 13 • August 8 • October 10 • December 12 • Registration • http://www.aimnet.org/education-training/index.cfm?calendarDate=12/11/12&typeFilter=Webinar&topicFilter=HEALTHCARE&locationFilter=&submit=GO#.Uelfbm1YQmk

  34. Discussion & Questions www.aimnet.org | 800.470.6277

  35. Stay Informed With AIM • Health Care Bulletins and Blogs • Newsletters • Seminars and workshops • Webinars • HR Roundtables • Toll-free HR Hotline – 800.470.6277 • Business Insider – http://blog.aimnet.org

  36. Thank You! Associated Industries of Massachusetts One Beacon St., Boston, MA 02108 www.aimnet.org rsullivan@aimnet.org Direct: 617.488.8393

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